It's payback time: Axel Stepken

In the last 18 years, Germany-based TUV SUD has come a long way in India, from being a management certification firm to a fully-fledged technical testing and inspection company. It recently opened a testing lab in Gurgaon with an investment of euro 5 million. In conversation with Ruchika Chitravanshi, global CEO of TUV SUD, Axel Stepken, said the retail sector boom would be a key growth driver in India. Edited excerpts:

How have you seen the Indian market evolve in terms of quality standards during your long presence here?

India has been one of the success stories for our group. One of the key factors for our success is the awareness of the Indian middle class for quality. This has changed over the years and will continue to evolve. The young middle-class person is a global traveller. There is no reason why he would not expect good quality he has experienced in the UK and US.

How does the Indian market compare with its global counterparts where you operate?
I would say the standards are exactly the same. Implementation is a different matter. I do not have to tell you how long some of the processes take here. There are loopholes; people just try to evade. Few months ago we opened a car inspection here. Right now the law says that the trucks and buses have to undergo these tests.

This has to be expanded to passenger cars. We are market leaders in providing these services in Italy, Spain, etc. And in India this will only work if a law is there, and also the means to check if people really go for this inspection. Third, and most important, people really do it.

In a globalised world, how competitive are Indian products and services on the quality benchmark?
When you take the benchmark of a highly-developed country like Germany, then, of course, you have a huge gap. But, what we have observed is the gap is getting smaller. Of course, there is still a huge gap. For instance, for Indian companies who are active in the global market and want to sell products to Walmart and the Metros of the world, they have to have the exact same quality standards as everybody else in the world. When it comes to infrastructure, there might be a larger gap. But this would also change, and this also gives us an opportunity in India.

Can you share any example of an Indian company which has seen this transformation?
Unilever has decided to move a certain part of its research and development to India. They do this work not only for the products sold at the Indian market, but also for the rest of the world. 15 years ago, I worked in Indonesia, and we would never have used an Indonesian washing powder in our washing machines. Today it is different.

Companies in India have become quality conscious because of internal demand, not external.

You have been conducting inspections in areas like food safety, chemicals, etc. What are the new sectors you are exploring in India?
Retail is going to be one of the biggest growth areas for us. We have invested euro 8 million in the last two-three years in India. Now it is payback time. Textile is an important area, mostly for international retailers. Besides, the big retailers like Walmart, Ikea are our clients in India. With the coming of the new FDI law, we expect this part of our business would increase as we see new players coming to India.

What is your long-term vision for India?
Our intention is to grow the business by a factor of seven in the next seven years. Total in group we have 17,000 people of which 1,200 are in India. Sale per employee is much higher in Germany and other countries. Over the next years India will pick up. It will take generations for salaries to be equal to salaries in Germany.